CArdio3 BioSciences Reports 2014 Fincancial and Operating Results
Significant Progress Made in Building a Global Specialty Therapeutics Company
Conference Call to Be Held on 26 March 2015 at 2.00 p.m. CET / 9.00 a.m. ET
- Expansion into the CAR T-cell space with rapid development goals leveraging our cell therapy expertise
- Completed enrollment of CHART-1 with top line data in 2016, progressing towards a CHART-2 start in the USA
- Improved financial position following successful capital raises to finance growth
- Establishing our US operations in Rochester MN, and Boston MA
Mont-Saint-Guibert, Belgium, – Cardio3 BioSciences SA (C3BS) (NYSE Euronext Brussels and Paris: CARD), a leader in the discovery and development of engineered cell-therapy treatments, today provided an update on recent business developments and strategic initiatives, and reported consolidated financial results for the twelve-month period ended 31 December 2014, prepared in accordance with IFRS.
Commenting on the 2014 results, Dr Christian Homsy, CEO of Cardio3 BioSciences, said: “We made significant strategic, operational and financial advancements in 2014 as we seek to build C3BS into a global specialty therapeutics company. The momentum built over this period has carried over into the early part of 2015, which has seen us reach important milestones in both of our C-Cure® Phase III programs CHART-1 and CHART-2. C3BS continues to make strong progress in the late stages of C-Cure® development and we look forward to reporting the upcoming futility data.
“Our acquisition of the OnCyte CAR T-Cell portfolio in early 2015 heralds the first major step in our strategy to leverage our unique expertise in cell therapies and drug development to expand beyond the cardiac arena to develop breakthrough treatments to change the outcome of disease. We are excited to be expanding our product offering into the prominent area of immuno-oncology and anticipate the initiation of the Phase I trial of our lead immuno-oncology candidate, CAR-NKG2D in the first half of 2015 and look forward to sharing details of our progress as we evaluate its clinical potential. We intend to leverage our cell therapy know-how and infrastructure to quickly progress those assets into later stage clinical trials in 2016, aiming at more than five trials in liquid and solid tumors in the USA and Europe.
“Overall, 2014 was an exciting and successful year for C3BS, but more importantly, it set the stage for even greater accomplishments in the years to come.”
Conference call details
A conference call will be held on Thursday, March 26, 2015 at 2:00 p.m. CET / 9:00 a.m. EDT to review the financial results. Christian Homsy, Chief Executive Officer, and Patrick Jeanmart, Chief Financial Officer will deliver a brief presentation, which will be available to download from here 15 minutes before the call commences, followed by a Q&A session. Participants are asked to call the assigned number approximately five minutes before the conference call begins.
The call can be accessed by dialing the numbers below and quoting conference ID 10703467.
- Participant International Dial-In: + 44 (0)1452 541003
- Belgium :011500193
- France :0170700780
- United States :1-646-741-2120
A recording of the presentation will be available on the Cardio3 Biosciences website following the call for a period of 15 days.
2014 and recent operational highlights
- Completed enrollment in CHART-1 Phase III clinical trial of lead product candidate, C-Cure®, for the treatment of ischemic heart failure, futility data expected to be reported in the second quarter of 2015
- Received product-specific pediatric waiver for C-Cure® from European Medicines Agency (EMA) – confirming focus on adult population
- Initiated sites for second Phase III trial evaluating C-Cure®, CHART-2, in the U.S. with new protocol for use of injection catheter C-Cathez® to deliver C-Cure,® currently under review by the FDA; pending FDA clearance to initiate the trial expected in the second half of 2015
- Took first major step in strategy to broaden Company’s focus beyond cardiology and entered immuno-oncology arena with acquisition of OnCyte CAR T-cell portfolio from Celdara Medical, LLC
- Initiation of U.S. Phase I trial evaluating lead oncology candidate, CAR-NKG2D, expected in the first half of 2015 with interim results expected to be reported at various times during the trial and full data readout expected in the middle of 2016
- Expanded collaboration with Mayo Clinic, through non-exclusive preferred access agreement, allowing C3BS to regularly review Mayo Clinic’s regenerative medicine portfolio to identify projects of mutual interest
- Confirmed plans to build a new U.S.-based manufacturing facility in Rochester, Minnesota, to support the Company’s current and anticipated manufacturing needs in the United States for C-Cure® CHART-2, and CAR T-cell therapies’ portfolio, and establish a Boston based U.S. headquarters
- Strengthened management team to support Company in its ambitions to become a global leader in specialty therapeutics and reinforce its position in both cardiology and oncology with the appointment of Dr. Georges Rawadi as Vice President, Business Development and Dr. Warren Sherman as Chief Medical Officer
2014 and recent financial highlights
- Completed a €32 million private placement with U.S. and European investors at €44.50 per share in February 2015, representing no discount to previous day market price and a 4% premium to the last 30 days average price preceding the transaction
- Completed a share capital increase of €25 million in June 2014 at €44 per share, a 14% premium to the 30 days average price preceding the transaction
- Completed a secondary placement of 141,800 shares at €43.5 per share with six new Swiss institutional investors in July 2014. This transaction occurred off-market through an exchange of shares between certain historical shareholders of the Company and Swiss professional investors.
- €30 million in cash and term deposits as of 31 December 2014, sufficient to fund the C-Cure® clinical program until the availability of the read-out of the primary endpoint, anticipated first half of 2016.
C-Cure® clinical program update
CHART-1 (Congestive Heart failure Cardiopoietic Regenerative Therapy) Trial
CHART-1 is a Phase III clinical trial evaluating C-Cure®, the Company’s lead cardiac product candidate. The Company successfully met its defined objective of enrolling the 240th patient in CHART-1 by the end of 2014 and completed patient enrolment in March 2015.
At the beginning of May, the European Medicines Agency (EMA) issued a certification of quality data for C-Cure®. The Advanced Therapy Medicinal Products (ATMP) certification recognizes the data generated for C-Cure® in its development program so far as meeting the standards imposed by t he EMA. The ATMP’s certification for quality data will facilitate the EMA’s review of the Company’s anticipated future application for marketing authorization for C-Cure®.
In mid-September, Cardio3 BioSciences announced it had received the unanimous recommendation of the Data Safety and Monitoring Board (DSMB) to continue the CHART-1 trial according to the original protocol. The recommendation was based on a planned analysis performed on all patient safety data available as per mid-August 2014. All the members of the DSMB approved the continuation of the trial having concluded that one month post treatment, C-Cure® and C-Cathez® showed no safety issues that compromise the continuation of the CHART-1 Phase III study.
The Company anticipates publication of the full data set for CHART-1 in mid-2016. However, the Company expects to be able to publish the interim futility data from the CHART-1 trial in the second quarter of 2015. These data, will be independently assessed by the trial’s Data and Safety Management Board (DSMB), which will assess whether efficacy indicators have been met and whether the clinical study can be further completed.
In January 2014, the U.S. Food and Drug Administration (FDA) authorized the Company’s Investigational New Drug (IND) application for clinical testing of C-Cure® as a treatment targeting heart failure using the MyoStar™ injection catheter. CHART-2, the Company’s second Phase III clinical trial to be conducted in the United States, is intended to assess the efficacy of C-Cure®. The primary endpoint of the trial is the “Six Minute Walk Test” nine months post-procedure, a commonly used index of cardiovascular performance. Results of the Phase II trial demonstrated that C-Cure® showed a 25% relative improvement in cardiac function over baseline for treated patients versus 0.7% relative improvement for the control group.
In November, Cardio3 BioSciences announced the nomination of its three Co-principal investigators for its CHART-2 Phase III clinical trial of C-Cure®: Dr Bernard J. Gersh, Professor of Medicine at Mayo Clinic College of Medicine, Rochester, Minnesota; Dr Thomas Povsic, Associate Professor of Medicine at Duke University, Durham, North Carolina; and Dr Gerasimos Filippatos, Head of the Heart Failure Unit at the Athens University Hospital Attikon, President of the Heart Failure Association of the European Society of Cardiology (ESC).
In January 2015, Cardio3 BioSciences submitted an amendment to the protocol to the FDA for the CHART-2 study which included the use of the injection catheter C-Cathez® alongside C-Cure® in the Phase III trial. Final review and FDA decision are expected in the second half of2015.
C-Cure® Pediatric Investigation Plan waiver
In March 2014 Cardio3 BioSciences received from the EMA an official, product-specific pediatric waiver for C-Cure® across all subsets of the pediatric population for the treatment of ischemic heart disease. As medical and surgical treatments exist for this extremely rare condition among pediatric patients, Cardio3 BioSciences has focused its regulatory approach for C-Cure® regenerative therapy on the adult patient population. Subsequently, the EMA delivered the waiver to Cardio3 BioSciences, hence making it official that the clinical studies of C-Cure® would be restricted to the adult population.
Publication in specialized press
During the first quarter of 2014, Cardio3 BioSciences’ lineage-specified cardiac progenitor (Cardiopoietic) technology was referenced in the journal Nature Reviews Cardiology and European Heart Journal as a next generation advancement in the science of regeneration.
Strengthening of Company assets and development strategy
In January 2015, Cardio3 BioSciences entered the immuno-oncology space through the acquisition of OnCyte’s CAR T-Cell portfolio of clinical-stage immuno-oncology assets. The portfolio includes three autologous CAR T-Cell cell therapy products and an allogeneic T-Cell platform, targeting a broad range of cancer indications. CAR T-Cell immuno-oncology represents one of the most promising cancer treatment areas today. We expect to initiate a U.S. Phase I trial evaluating our lead immune-oncology portfolio candidate, CAR-NKG2D, in the first quarter of 2015, with interim results expected at various times during the trial and final results expected by mid-2016. The Company intends to rapidly advance the development all of the OnCyte assets, with a focus on CAR NKG2D, which should move into at least five later stage trials in 2016, in various solid and liquid tumors in both Europe and the USA.
In October 2014, Cardio3 BioSciences announced the signing of a non-exclusive preferred access agreement with the Mayo Clinic. With this agreement, Cardio3 BioSciences agreed to give preferred consideration for Rochester, Minnesota to the U.S. to build a manufacturing facility for the production of C-Cure®, at a facility located adjacent to the campus of the Mayo Clinic, and the Mayo Clinic agreed to periodically review with Cardio3 BioSciences its portfolio of regenerative medicine technologies, including in the areas of cardiology and oncology, with a view towards future potential licensing. Building on its core competencies and unique expertise in cellular therapies and cardiovascular diseases developed with C-Cure®, Cardio3 Biosciences’ potential access to Mayo Clinic Center for Regenerative Medicine technologies has the potential to further strengthen the Company’s long-term plan to bring the best innovative therapeutic response to unmet medical needs.
Also in November, Cardio3 BioSciences successfully acquired CorQuest and its unique heart access platform that could receive CE marking by the end of 2016. The acquisition also included medical devices and implants targeted at mitral valve defects indications. This acquisition bolsters the Company’s strategic position as a leading developer of innovative devices for cardiac surgery and the treatment of cardiovascular indications. Moreover, the CorQuest technology platform is fully complementary with Cardio3 BioSciences’ C-Cathez® and C-Cure® programs.
Strengthening of operational capabilities with additions to the team
At the end of March 2014, the Company announced the appointment of Hanspeter Spek as an Independent director. Mr. Spek represents a major addition to the Board and is expected to contribute significantly to the conclusion of industry partnerships in preparation for the commercialization of the Company’s products. Hanspeter was President Global Operations of Sanofi, prior to his retirement from the Company in mid-2013.
At the beginning of June, the Company appointed Dr. Georges Rawadi as Vice President, Business Development. Leveraging more than 20 years of experience in the healthcare industry, Dr. Rawadi will be responsible for leading Cardio3 BioSciences’ worldwide business development efforts, by identifying avenues for growth, international expansion and managing the company’s business partner relationships.
At the beginning of November 2014, Dr. Warren Sherman joined the Company as Chief Medical Officer to support the continued development of the product pipeline, both in cell therapies and cardiovascular diseases
On 30 June 2014, the Company completed a capital raise of €25 million, which was priced at €44 per share, a 14% premium to the 30 days average price preceding the transaction. In conjunction with the raise, the Company welcomed new investor Medisun International Limited, a Hong Kong-based investment company.
In early July 2014, the Company completed a secondary placement with six Swiss institutional investors. This transaction occurred off-market through an exchange of shares between certain historical shareholders of the Company and Swiss professional investors. The transaction involved the sale of 141,800 shares at €43.5 each. The proportion of shares sold by the existing shareholders did not exceed 25% of their stake in the Company. The share capital and the number of shares of the Company remained unchanged after this secondary transaction.
As of 31 December 2014 Cardio3 BioSciences had €30.3 million in treasury compared to €22.1 million on 31 December 2013.
For the twelve month period ending 31 December 2014, total operating expenses of the Company amounted to €20.9 million compared to €13.0 million for the same period in 2013. Increase of operating expenses of 2013 is in line with Company expectations, and partially offset by non-dilutive funding received over 2014, presented as other operating income. At year-end 2014, the net loss for period was €16.5 million versus a net loss of €14.5 million for same period in 2013.
Cash flow from operating activities represented at year end 2014 a net cash outflow of €17.4 million, or an increase of €6.8 million compared to 2013. This increase primarily resulted from the operational costs associated to the C-Cure® CHART-1 clinical trial, initiated in mid-2013.
Cash flow from investing activities represented a net cash outflow amounting to €1.8 million in 2014 mainly due to the acquisition of CorQuest for €1.5 million. In 2013, most of the cash outflow from investing activities resulted from a €3 million investment in a 3-year short term deposit account.
Cash flow from financing activities represented a net cash inflow €27.8 million in 2014 compared to €31.6 million in 2013. In 2014, the proceeds from issuance of shares amount to €25.3 million (compared to €31.0 million in 2013), whereas the proceeds received from non-dilutive funding (Walloon Region and FP7 programs) amounted to €2.4 million in 2014.
The complete “2014 Annual Financial Report” will be available on the Company’s website on May 5, after the Annual Shareholders’ meeting has taken place.
The Company continues to exercise prudent cash management, ending 2014 with €30.3 million in cash and term deposits. Cardio3 management believes that the current cash balance is sufficient to fund the C-Cure® clinical program until the availability of the read-out of the primary endpoint, anticipated first half of 2016.
Significant events occurring post balance sheet date
In January 2015, we acquired 100% of the membership interests of Oncyte LLC from Celdara Medical LLC in exchange for a total upfront payment of USD 10 million, comprised of cash consideration of $6 million and new shares of Cardio3 BioSciences for a total value of $4 million. The sales price also includes contingent consideration payments based on future outcome of the research and development until market approval of $50 million and potential additional future sales milestones and royalties.
In February 2015, the Company announced that it had successfully raised €32 million through a private placement of ordinary shares to qualified institutional investors in the United States and Europe at a price of €44.50 per share. The proceeds from the private placement will be used by Cardio3 BioSciences to further develop its newly acquired CAR-T cell technology platform; strengthen the leadership of C-Cure® for the treatment of congestive heart failure as well as for general corporate purposes.
Auditor report and restatement of 2013 Financial Statements
PriceWaterhouseCoopers, the new statutory auditor of the Group has not yet issued its audit report on the annual consolidated accounts for the year ended 31 December 2014.
The financial statements of the Group of 2013 were restated to reflect errors in the IFRS accounting treatment of respectively the shareholders convertible loans and the share based payments.
After due consideration with its auditors, we decided that the shareholders convertible loans should have been accounted for as a financial debt instead of equity (previously called ‘quasi equity’) as originally posted in our 2013 financial statements, because the loans were convertible into a variable number of shares. This correction of error in the IFRS accounting treatment triggers the valuation of this financial debt at fair value at inception and at each subsequent reporting date up till conversion in May 2013. The revaluation to fair value of this financial debt led to an additional financial expense of € 1.1 million in the 2013 income statement. Due to the conversion of these convertible loans in May 2013, the amount of the financial liability has been reclassified into equity.
The adjustment of the share based payments is related to the warrant plan issued by the Group in May 2013, initially valued using a share price at €2.64. After due consideration, we decided to increase the fair value of the shares used to determine the share based payment measurements to €16.65 in light of the IPO listing price of €16.65, triggering an increase of the share base payments and an additional noncash expenses in 2013 of €1.0 million.
The total net equity of the Group as of 31 December 2013 remains unchanged. These adjustments have no impact on the cash flow statement neither on the net cash position of the Company as of 31 December 2013 as there are a non-cash adjustment.